When democracy was restored (though peronism became illegal) in 1958, a Socialist Party congress was held in Rosario, in which a faction led by the Senator Alfredo Palacios and Alicia Moreau de Justo denounced that some party leaders were not truly socialists, accusing them of supporting a new version of Manchester Liberalism.

Though both proclaimed themselves as the Socialist Party, the government forced them to use different denominations, ending up in Argentine and Democratic respectively.

The party could ensure stability during these years, something that would change after the death of its leader, Alfredo Palacios, in 1965.

[1] Although the PSA suffered some minor splits after its foundation, these became common after the death of Palacios and the illegalization of political parties after the 1966–1973 coup.

Because of this, the de facto president, Alejandro Lanusse, announced the restoration of democracy through the 1972 Gran Acuerdo Nacional (in English, Great National Accord) and his Interior Minister, Arturo Mor Roig, organized elections for 1973.